This alert discusses the most relevant changes in Dutch tax
legislation applicable per 1 January 2025 and upcoming years, with
a focus on rules relevant for cross border corporate structures and
internationally oriented companies.
We already informed you about the proposed legislative changes for
the occasion of Budget Day by way of our tax alert dated
18 September 2024. Besides the proposals in
connection with Budget Day, also other changes which are relevant
for corporate income taxpayers involved in cross border corporate
structures entered into effect on 1 January 2025, such as the
amendments in the tax classification (opaque or transparent) rules
for domestic and foreign legal entities, the abolition of partial
foreign taxpayer regime and real estate transfer tax exemption in
share transactions and changes to special tax regimes (VBI and FBI
regime). Also, certain other legislative proposals are summarized
which entered into force on 1 January 2025 or are expected to enter
into force from 1 January 2026 onwards.
Corporate income tax
Earning stripping rules
The generic interest deduction limitation rule on net interest
expenses (earnings stripping rule) had a threshold of the highest
of EUR 1 million or 20% of the EBITDA in the year 2024. This
percentage has been increased to 24.5% as per 1 January 2025.
Interaction corporate income tax and minimum tax
The changes aim to specify that for certain anti-abuse rules, a
so-called minimum tax (also known as Pillar 2) qualifies as a
profit tax. The changes may be relevant for the application of the
anti-base erosion rules, the Dutch participation exemption rules
and the object exemption.
Amendment anti abuse rule article 10a CITA
Article 10a of the corporate income tax Act (CITA) contains an
anti-abuse provision under which interest on debts to related
entities or persons is not deductible to the extent that those
debts, in brief, relate to certain 'tainted' situations.
Due to a change in the Dutch tax classification rules (see further
below), transparent entities have been included under the
definition of related entities for the application of article 10a
CITA.
Amendment debt waiver income exemption
The interaction between the debt waiver income exemption and the
loss carry forward rules in the CITA has been amended. Under the
limitation of loss carry forward rules, if a company has more than
EUR 1 million in losses to offset and a taxable profit (including
income as a result of the waiver) exceeding EUR 1 million in the
same year, CIT may be due, since losses in excess of EUR 1 million
can only be set off for 50%. This tax burden can obstruct
agreements under the Dutch extrajudicial restructuring plans bill
(WHOA) and may push viable businesses into bankruptcy. Under the
new rules, debt waiver income is fully exempt for situations where
more than EUR 1 million in losses can be carried forward, as long
as the debt waiver income exceeds the losses incurred in the same
year. For cases with losses under EUR 1 million, the current system
remains unchanged.
Simplified sister merger
The existing tax rollover facilities for legal mergers has been
extended to shareholders involved in a simplified sister merger. In
a simplified sister merger, two subsidiaries which are both fully
owned by the same shareholder are merged without issuance of new
shares. Under the new rules, the shareholder can apply for rollover
relief, subject to certain conditions.
Implementation ATAD1 GAAR
The General Anti-Abuse Rule (GAAR) from the first EU anti-tax
avoidance Directive (ATAD1) has been incorporated into Dutch tax
law. When the Netherlands implemented the ATAD1 into domestic
legislation, the choice was made not to include the GAAR in the law
as the GAAR's objectives are already addressed by the existing
legal concept of fraus legis. The proposed measure addresses a
request from the European Commission without intending to make any
substantial changes to the current legal practice.
Tax classification rules
The Dutch entity classification rules have changed on 1 January
2025. The legislative change impacts the tax treatment of Dutch
partnerships (CV and open CV), funds (FGRs) and foreign legal forms
and is aimed to reduce international mismatches. Under the new
rules all CVs will in general be qualified as tax transparent,
unless they qualify as an FGR. For more information regarding this
bill, reference is made to our tax alert of 1 June 2023 and of 1 November 2024.
Changes FBI and VBI regime
As of 1 January 2025, the regime for fiscal investment institutions
(FBI) has changed. The FBI regime no longer applies to profits
directly derived from real estate investments. Consequently, such
profits will be subject to the regular CIT rates of up to 25.8%
instead of the 0% rate. In addition, a new measure applies which
restricts the access of the exempt investment institution regime
(VBI) to CIT payers which qualify as a regulated investment
institution within the meaning of the Act on Financial Supervision.
A VBI which does not fall under this scope will lose its VBI
status.
Personal income tax
30% extraterritorial allowance
The tax-free extraterritorial allowance will be reduced from 30% to
27% from 1 January 2027 onwards. The adopted rules replace an
earlier law to scale back the advantages of the extraterritorial
allowance, see our tax alert of 21 December 2023. In addition, the minimum
required salary has been increased from EUR 46,107 to EUR 46,660
and the minimum required salary for employees under the age of 30
who have obtained a master's degree at a university from EUR
35,048 to EUR 35,468. These amounts are 2024 amounts and will be
increased with inflation. A transitional regime applies for
employees who already applied for the extraterritorial allowance in
2024.
Abolition of partial foreign taxpayer regime
The partial foreign taxpayer regime has been abolished per 1
January 2025. As a consequence, qualifying taxpayers can no longer
opt for a partial exemption of Dutch personal income tax (PIT)
(i.e. Box 2 and Box 3).
Business succession regime
Several changes to the business succession facilities for the
roll-over facility of the substantial interest for PIT (DSR) and
Dutch gift and inheritance tax purposes (BOR) have been made. The
most important changes can be summarized as follows:
- The scope of the exemption of the BOR has been increased to the going concern value of EUR 1.5 million (2023: EUR 1,325,253). The exemption of the surplus is lowered from 83% in 2024 to 75% in 2025.
- The DSR and BOR will in principle only be available for ordinary shares and preference shares representing a minimum interest of at least 5% of the paid-up share capital (most likely per 1 January 2026).
- Abolition of employment criterion (i.e. BOR only applies if beneficiary has been employee for at least 3 years), introduction of minimum age of the beneficiary of at least 21 years (per 1 January 2025).
- Relaxation of the so-called ownership and continuation requirement (partly per 1 January 2025 and partly per 1 January 2026).
- Limitation of unintended use of the BOR at a (very) high age (per 1 January 2026).
- Limitation of double use of the BOR (per 1 January 2026).
- The so-called 5% efficiency margin in will be abolished. This efficiency margin allows 5% of the non-qualifying assets to be reclassified as business assets eligible for the BOR (per 1 January 2026) and DSR (at a still unknown date).
Reduction of Box 2 tax rate
The PIT rules for the so-called substantial interest holders of box
2 changed. In short, this relates to individuals holding at least
5% of (a certain class of) shares, either on their own or together
with certain others. The threshold of the lower rate of 24.5%
increased from EUR 67,000 in the year 2024 to EUR 67,804 in the
year 2025. The excess is taxed at a reduced rate of 31% (instead of
33% in the year 2024).
(Conditional) Withholding tax
New group criterion
The Netherlands levies a conditional withholding tax on interest
and royalty payments (from 1 January 2021 onwards) and on dividends
(from 1 January 2024 onwards) to affiliated parties. The required
affiliation is determined by way of a so-called 'qualifying
interest'. A qualifying interest is inter alia present in the
case of a 'cooperating group'. A new group criterion has
been introduced instead of the 'cooperating group' with a
reduced scope i.e. a 'qualifying unity' from 1 January 2025
onwards. A qualifying unity is present if entities act together
with the main aim or one of the main aims to avoid the levy of
withholding tax of one of the entities.
Repurchase facility listed companies
Under the repurchase facility, listed companies may repurchase own
share without Dutch dividend withholding tax being due, subject to
certain conditions. In the 2024 tax plan it was announced that this
facility will be abolished on 1 January 2025. However, it was
decided that this facility will remain in force.
Change in dividend withholding tax exemption
Per 1 January 2025, the optional dividend withholding tax exemption
in domestic situations and within fiscal unity situations has been
abolished. The shareholder may object and appeal against the
withholding of the dividend tax, without interference of the
distributing entity.
Real estate transfer tax
Abolition of real estate transfer tax exemption in share
transactions
The current RETT exemption applicable to share transactions whose
supply is subject to VAT has been abolished. Such transactions are
subject to RETT at a rate of 4% per 1 January 2025.
Reduction in tax rate
The general RETT rate applicable to dwellings of 10.4% will be
reduced to 8% on 1 January 2026. This rate will apply to
non-owner-occupied dwellings.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.